Home buyers sometimes need some help from sellers to pay for closing costs.
As a seller, do I have to cover closing costs for a buyer? I get asked this question a lot. Most of the time, sellers don’t understand why they owe their buyers closing costs. To clarify, sellers aren’t obligated to cover closing costs. However, buyers may request credit for them during negotiations. To help you understand, here’s how it works:
A buyer typically needs to pay for the down payment and closing costs. There are times that they need assistance covering closing costs, so they might ask the seller for a credit. This doesn’t mean the seller owes them money. Instead, the buyer wants to include closing costs in the loan amount.
For example, imagine a house priced at $500,000. The buyer offers 20% down, which is $100,000. But they lack the additional $15,000 needed for closing costs and prepaid expenses. By writing an offer of $500,000, they might also request a $15,000 closing cost credit. This means they don’t have the extra $15,000 and want the seller to cover it.
Buyer closing costs are another element of a negotiation point, like the purchase price. If a buyer offers $500,000 with a $15,000 closing cost credit, it effectively becomes a net offer of $485,000. Sometimes, buyers also use closing cost credits to buy down the interest rate, making the monthly payment for a 30-year loan more manageable.
Whether you accept depends on several factors: How long has the house been on the market? Are there comparable sales in the neighborhood? How confident are you in your initial asking price? The market price isn’t dictated solely by the seller or buyer. The seller sets the asking price, the buyer makes an offer, and the final price is where those two points meet.
Again, closing costs are just one aspect of the negotiation process. We can negotiate on your behalf to find the best terms for you as the seller. Feel free to reach out to us at asksarita.com if you have any questions, or simply call me at (503) 522-0090. We’re here to guide you through your home-selling journey.
